b'Insurance Regulatory | US/NAIC Insurance Business Transfer and Division MechanismsIn recent years, a number of US jurisdictions have established legal frameworks that would allow for the voluntary restructuring of solvent insurers. This development has its roots in the UK. Since 2000, the UK Financial Services and Markets Act (FSMA) has provided a statutory mechanism for voluntary restructurings by solvent insurers, including allowing such insurers to transfer a portfolio of insurance business to another entity. Governed by sections 104-116 of Part VII of the FSMA, such transfers (commonly referred to as Part VII Transfers) allow an insurer (or reinsurer) to transfer blocks of insurance business from one legal entity to another, subject to court approval. This procedure has been used in a variety of contexts, including to give effect to group reorganizations. Until recently, the use of an insurance business transfer (IBT) by a solvent insurer has historically been resisted in the US. Only recently has that begun to change.In the US, enabling legislation in this area has taken two distinct forms:IBTs, which resemble Part VII Transfers and allow insurers to transfer blocks of insurance business to another legal entity; andInsurance company divisions, which allow for an insurer to divide itself into two or more companies, with assets and liabilities (including insurance policies) being divided among the resulting companies.To date, IBT legislation has been enacted in Rhode Island, Vermont and Oklahoma, and division legislation has been enacted in Connecticut, Illinois, Michigan, Iowa and Georgia. Our 2019 Year in Review discussed most of those IBT and division statutes, including the differences in approval requirements across the various states. In addition, the Pennsylvania Associations Code has long included a subchapter allowing for the division of Pennsylvania business entities (not just insurers). In 2018, the NAICs Financial Condition (E) Committee established a Restructuring Mechanisms (E) Working Group to study and evaluate IBT and division legislation, including the legal issues posed by court or regulatory approval in one state affecting policyholders in another state. That working group has the preparation of a white paper on the subject as one of its 2021 charges.The two key developments of 2020 are that the National Council of Insurance Legislators (NCOIL) adopted an Insurance Business Transfer Model Act (the NCOIL Model Act) and that the first IBT in the US was completed in Oklahoma.66GLOBAL INSURANCE INDUSTRY | YEAR IN REVIEW2020'